Kontogiannis also fined $1.05 million

By Greg Moran

UNION-TRIBUNE STAFF WRITER

May 17, 2008

The contrition, tears and poor health of Thomas Kontogiannis were not enough to spare him a prison sentence of eight years and one month for his role in laundering bribe money for former Rep. Randy “Duke” Cunningham.

Thomas Kontogiannis

U.S. District Judge Larry Burns also fined the wealthy Long Island financier $1,050,000 – twice the value of the bribe that Kontogiannis laundered through fraudulent mortgages that allowed Cunningham to buy a $2.4 million mansion in Rancho Santa Fe.

Cunningham, a Republican, is serving an eight-year, four-month sentence in federal prison after pleading guilty to conspiracy and tax evasion. Brent Wilkes, a former defense contractor from Poway, was convicted of 13 charges of bribing Cunningham and was sentenced to 12 years; he is appealing his convictions.

Kontogiannis, 59, pleaded guilty 15 months ago to a single charge of money laundering. The deal included a cap on his prison sentence of 10 years – a move that the prosecutor on the case, Assistant U.S. Attorney Jason Forge, acknowledged in court yesterday was a mistake.

That is because after pleading guilty, Kontogiannis continued issuing millions of dollars in fraudulent mortgages and has continued to profit fromthem, Forge said.

Appearing pale and looking frail after recently having open heart surgery, Kontogiannis called his actions a “mistake.” He tearfully told Burns, “I just hope the opportunity is given to me to make good with the people I let down.”

His lawyer, Gregory O'Connell, said Kontogiannis was a “broken man” and asked Burns to fashion a sentence that would punish him but also allow him to get the medical attention he needs.

He suggested that he could serve a period in prison then be placed under strict house arrest for the remainder of the time. Burns rejected that path.

The judge weighed Kontogiannis' role in the Cunningham scandal. While acknowledging that Wilkes and Cunningham bore more blame, Burns said Kontogiannis played a role in the corrosive effects the scandal had on the public perception of government and elected officials.

Burns said Kontogiannis was to some extent a self-made man who helped family members and friends, but the judge could not reconcile that with Kontogiannis' other side.

That side, the judge said, enlisted family members in the fraudulent schemes and used them in “a criminal enterprise.” John Michael, Kontogiannis' nephew, pleaded guilty to conspiracy to commit money laundering and lying to a federal grand jury in connection with the Cunningham case.

Burns also took into account that Kontogiannis continued breaking the law after he pleaded guilty.

“Here you are with your rear end on fire over this Cunningham thing, and you're out there making bad loans?” Burns said. “I think that's just brazen.”

Kontogiannis' guilty plea was done in a secret hearing that was kept under wraps for several months. Why the deal was taken in secret remains under seal, although transcripts and other records surrounding the plea have become public after the secrecy was challenged by The San Diego Union-Tribune.

He was believed to be cooperating with federal authorities on some matters, but the extent is not known.